How to Sell Financial Model Templates

We, eFinancialModels, makes it pretty easy to sell financial model templates as our website is targeted towards entrepreneurs, investors, and finance professionals. Once registered as a vendor, the vendor can easily submit his financial model templates on our platform.

This article is a short guide on how you can better sell financial model templates with efinancialmodels.com. By pointing out the different related subjects, we’ll be able to give you some tips or ideas which can be useful once you start selling your financial model templates.

Who needs a Financial Model Template?

Financial models are mostly needed as basis for financial decision-making. They are either prepared on a Do-It-Yourself basis or requested by the following user types:

  • Entrepreneurs and Founders
  • Investors
  • Management Executives, mostly CFOs and CEOs
  • Financial advisors
  • Management consultants
  • Financial Analysts
  • Business Analysts
  • Banks

Financial models always serve a specific purpose: E.g. investors want to find out what is the profitability of an envisaged investment, management wants to learn the expected cash flows of the business for planning purposes, investors and business owners want to obtain a valuation of a company or entrepreneurs need to figure out how they can optimally design their business model to create an interesting investment case to raise financing from investors. There are many more applications as the possibilities and usefulness of financial models are nearly endless. For more information please refer to the article here.

 

Why Users are interested in a Financial Model Template?

Before you build a financial model, let’s shortly review the interests of the recipients on what they are looking for in a good template.

The general reason why financial model templates are being searched is that they can save significant time. Creating a financial model can easily turn into a very time-consuming exercise. Thus, it is worth the effort first to check if there is a suitable financial model template available. It is much faster to get the job done when starting off with a good template, rather than having to start from scratch.

Now let’s look specifically at what aspects of a financial model template users are particularly interested in:

  1. Time Savings: Creating a financial model from scratch is simply time-consuming and requires a lot of attention to details. What customers purchase is a short-cut, which allows them to save significant time and benefit from the knowledge of the financial modeler who already went through the thinking process.
  2. Design and Structure: Complex business cases require a logical structure in order to understand them. Some financial models are hard to read, especially when they are very complex and extensive, simply because they lack structure, consistency and design. Therefore, the design and structure of a financial model template become essential, as well-structured models are easier to understand and to update, especially when more than one person deals with the model. Therefore, financial modelers are constantly looking for new ways to better structure their models.
  3. Industry Know-How: A good financial model template provides insights and expertise in a business and its industry. As financial models depend on the particular use, industry knowledge is very important. Each business has its drivers, but from a modeling perspective, normally each industry has some highly relevant aspects, which the model should address. Therefore, a good model provides valuable insights how the business and industry works and how value is being created.
  4. Presentation and Communication: As in many cases the financial model serves as the basis for a business plan, it turns out to be a key presentation and communication tool. Very often an entrepreneur or the management want that the financial model correctly reflects their vision and the potential of their business case. Therefore, it is very important that a financial model templates comes with a supportive layout which brings across the key messages and conclusions which can be drawn from the financial model.

This shows that a great financial model template can offer great benefits to the user and therefore gives a reason to purchase a template rather than spending hours to build a financial model from scratch.

 

How to design a Great Financial Model Template

A financial model may be done quickly as the author normally already has an in-depth understanding of the use case and does not need to explain every detail. But, preparing a great financial model template is a bit different, as it needs to address the needs of other users, which might possess different levels of sophistication in financial modeling.

The general aspect when designing a model template is user-friendliness. Everything, which makes the model user-friendly, is a bonus and will be appreciated by the users. As users will be located in different countries, the model needs to offer some flexibility to easily adapt the model to any country or currency where it shall be used.

Therefore, we will provide below, a more detailed list of which aspects a good financial model template can benefit from.

  1. Currency – The currency should be easily changeable as users might be located in different countries and might use other currencies than the US Dollar (USD). One way to do that can is to have the three-digit currency code being inputted in the assumptions and the stated currency in the calculations referred to that.
  2. Start Year – When a financial model explicitly uses years as column headers, they need to be updated as time goes by. One way to do that is also to put the starting year as input into the assumptions and make the other years dependent on that (e.g. Next Year = Start Year +1). For the past years, they can also make it dependent on the Starting Year (Past Year = Start Year -1).
  3. Inputs vs. Outputs – The author should be aware that for him, it’s easy to know which are the assumptions but for another reader, it might take a while to figure it out. A good model template should make it easy for the reader to understand which are the inputs and which are the outputs, to save time for them. There are different systems to do that e.g. by using different color codes for inputs and outputs, separating assumptions from the rest of the model, putting a very clear logic in place, etc. The author should just think about a way, on how to make it very easy for the user to understand his financial model template.
  4. Measurement units – In some industries, we have the situation that two measurement systems are being used, e.g. square meter and square foot for real estate. As you don’t know in which country the users of your financial model template will be situated, it can be a good idea to design the unit as input and link all references to that unit from this input. So, if a user needs a square foot instead of square feet, it will be easier for him if he can just pull a switch and the unit is changed.
  5. Convincing Logic and Structure – A good model applies a convincing logic which leads the user through the thinking-process. Therefore you need to structure and organize the model in a logical manner which can be easily followed.
  6. Design – a good layout and design supports the communication of key messages included in your model template. Also users normally appreciate great design and it helps them to build convincing financial plans which support their vision.
  7. User-friendliness – In general, a model template needs to be user-friendly and be made for persons with different levels of experience. So, your template might need some additional tweaking to make it user-friendly than when using the model only by yourself.
  8. Consistency – A financial model should be designed in a consistent way. E.g. for real estate models, where you want to project cash flows for single plots as well the overall project, the calculations for plots and the overall project can be separated into different sheets in Excel. Thus, it’s important that on each sheet of those plots, the revenues and costs are always placed on the same row numbers and the years always use the same columns. Designing a model in such a way makes it much easier, to sum up, the yearly totals (always same column, same rows) and to review the model.
  9. Detail vs. Complexity – Some model templates will be very detailed while others are more kept simple. There are pros and cons to each approach, but in general, it depends on the use case and the objectives of the model. If you need a very precise analysis, a more detailed model might better serve that purpose while if you just need a quick analysis of an investment case, a more high-level model might be quicker and be more useful to the reader.
  10. Terms and Abbreviations – Especially industry-specific models sometimes use very distinct terms, which for the non-industry folks might not be clear, or are not that easy to be understood. A good practice is to put an abbreviations summary into a separate sheet in the model, where all the abbreviations and key terms are explained.
  11. Macros – While macros in Excel can be quite fancy and useful, the downside is that they function like a black box and they are mostly not fully transparent what they exactly do. Therefore, the model becomes more difficult to review and it can even become a source of error if the model is not fully understood. Keep in mind on Mac Book, some Macros might not work as they do in Windows. Macros should only be used in a minimalistic way and not to confuse the users.
  12. Circular references – Some analysts create models with leaving circular references in their models, e.g. by calculating the interest payment based on the average of the year ends. The problem is that the end year cash balance is output in most excel models. Thus, they solve it by using iterations. The problem with that approach now is that it becomes very tricky to figure out if the model does not have an error somewhere else and also running sensitivity analysis becomes nearly impossible because of the iterations. Therefore, for a model template, it is better to avoid it.

The above list is quite comprehensive, isn’t it? So, what should you do if your model template does not address all the above points? – The tip is to put out the first version even if the first version is not perfect. But once you receive downloads and users start to review and comment on the model, you can easily enhance your model template by uploading a next version which starts to address the above points.

 

How to Explain your Financial Model

When sharing or selling a model template on platforms such as efinancialmodels.com, the product description is key for a reader to decide whether to purchase the model template or not. Thus, we summarized the following tips on how to enhance your chances of getting more downloads:

  1. Purpose – Users are looking for industry and financial modeling know-how and might not be familiar with all the benefits of your financial model. Therefore, it’s important to state the purpose and the benefits of using the model.
  2. Description – Users might not know what the purpose of the financial model is.  Provide a description of the functionalities of your model and the purpose it serves.
  3. Screenshots – The user wants to see what he is buying and get a feel of what the model will look like. Thus, it is best to add some screenshots to show what the user will get exactly.
  4. Demo Version – To offer a solid understanding of what is offered for sale, it is recommended to provide a demo version in form of e.g. a PDF file. We don’t recommend anymore to password protect cells in Excel files since we are not aware of a solid encryption which cannot be cracked.
  5. Support – It is advisable to add your contact details inside the excel model where the user can ask for more support or get your help for advanced modeling work. Many times, users will have questions or require customization services. This can lead to interesting financial modeling projects and income for your business.

We hope that this guide provided you with some good guidance on how to prepare a financial model template to sell more. Kindly keep in mind, it doesn’t have to be perfect for the first time, what’s more important is to see how the model can also be improved with the feedbacks and interests received from the users.

How to Choose a Price for your Financial Model Template

The price Users are willing to pay depends on the user’s problem and the perceived value you can bring to the table. You should check prices of other model templates offered on our platform to ensure you are aware of market prices but not shy away to ask a price what the model template is truly worth.

Based on our experience. the following factor determine how much customers are willing to pay for a model template:

  • Separation from inputs and outputs
  • Design
  • Structure
  • Complexity of Business Case
  • Extent to which your model is a bottom-up
  • Financial analysis included
  • Type and number of problems/questions this model can solve
  • If model is available in User’s home currency (or can be easily transformed)
  • Units (imperial or metric)
  • How well the model is explained and presented
  • Demo version available
  • Explainer video available
  • Instructions and guidance available in the model itself

Especially for higher-priced models, itis important that the user can exactly understand what he will get when he purchases a model. Thus, we recommend, to provide a Free Demo Version in form of a PDF file as well.

Sometimes it is difficult to figure out at what price to sell a template. We therefore recommend to offer the template in 2 or in some cases even 3 different version at different price points. Applying this tactic allows to better identify and address customer needs as based on the results you can better see what is in demand and how much customers are willing to pay for it. Therefore, just give it a try!

How to Market your Financial Model Template

We have years of experience marketing and selling financial model templates. Here is what you can do if you like to best market your financial model templates:

  1. Upload not only 1 but upload several financial model templates. This increases your selling possibilities and you can also get a better reading what customers really want.
  2. Provide clear product descriptions and outline the purpose of your financial model template when listing the product.
  3. Add eye-catching and well-designed images as screenshots on your product pages.
  4. Add demo versions.
  5. Add an explainer video.
  6. Ask for feedback in your models.
  7. Provide us with images which we can use on our social media channels.
  8. Write a guest post article on our blog to explain a certain topic or financial modeling case.
  9. Provide us with an interview about a topic of your choosing.
  10. Share the link to the product pages on your social networks.

We have years of experience selling small and big financial model templates and we do have data to support our recommendations. Work with us to sell your hard-work by becoming a financial model vendor on eFinancialModels or get in touch with us.